Last week, the Department of Labor (DOL) announced a new rule that automatically extends overtime pay protections to more than four million workers within the first year of its implementation. The updated overtime regulations were opposed by various business groups, including the National Retail Federation, which called the rule a “career killer.”
The final rule raises the salary and compensation levels at which executive, administrative, and professional workers are exempt from Fair Labor Standards Act’s minimum wage and overtime standards, DOL noted. Under the new regulations to be issued by the Labor Department on Wednesday, most salaried workers earning up to $47,476 a year must receive time-and-a-half overtime pay when they work more than 40 hours during a week. The previous exemption for overtime pay was $23,660.
The rule, which goes into effect on December 1, 2016, also dictates that salary and compensation levels should be updated every three years to maintain levels that “continue to provide useful and effective tests for exemption.”
In Columbus, Ohio, last week, Vice President Joe Biden told members of the media that the new overtime rule would be a boon to the middle class, as reported by the New York Times. “The middle class is getting clobbered. If you work overtime, you should actually get paid for working overtime,” Biden said.
“For the past 40 years, overtime protections have been increasingly weakened,” he continued, pointing out that, while 60 percent of salaried workers qualified for overtime in 1975 based on their salaries, only seven percent do today, the article noted.
However, in a statement, NRF Senior Vice President for Government Relations David French said the rule is tantamount to a demotion for millions workers. “In the retail sector alone, hundreds of thousands of career professionals will lose their status as salaried employees and find themselves reclassified as hourly workers, depriving them of the workplace flexibility and other benefits they so highly value,” French said, adding that the salary increase will mean “more red tape and fewer advancement opportunities for salaried professionals.”
French described the rule as a consequence of “policy rooted in pure politics” and said that NRF would continue to advocate for “realistic workplace policies.”
The U.S. Public Interest Research Group (U.S. PIRG), a federation of independent, state-based, citizen-funded organizations that advocate for the public interest, stressed that doubling the minimum salary “is especially unrealistic for nonprofit, cause-oriented organizations.” The rule would force them to hire fewer staff and “limit the hours those staff can work — all while the well-funded special interests that we’re up against will simply spend more,” U.S. PIRG said in a statement.
The new overtime regulations are two years in the making. In 2014, President Barack Obama signed a Presidential Memorandum directing DOL to update the regulations defining which white collar workers are protected by the Fair Labor Standards Act’s minimum wage and overtime standards. In July 2015, DOL published a Notice of Proposed Rulemaking (NPRM) in the Federal Register (80 FR 38515) and invited interested parties to submit written comments on the proposed rule at www.regulations.gov by September 4, 2015. DOL received more than 270,000 comments in response to the NPRM from a variety of interested stakeholders.